Notes is going to REPOST an old piece just to remind our readers and the financial world that the games surrounding the GREEK DEBT situation has turned into a marathon of concern and an Ironman competition of lies and deceit. The European policy makers are attempting to delay what the markets have deemed to be inevitable and pretend that a Greek restructuring will not take place. The fact that the market has driven two-year GREEK RATES to more than 25% is of no consequence to the EUROCRATS of Brussels for, as usual, the political elite will continue the facade of “ALL CLEAR” as the PIIGS move from crisis to crisis.

In a weekendBLOOMBERG piece, the recent improvement in Spanish inflation was hailed as a great positive. The fact that Spanish UNEMPLOYMENT is more than 21% and the economy is being pressed on an austerity budget, the possibility of inflation in Spain is of absolutely no importance, especially because the Spanish authorities have no control of the currency.

Spain cannot devalue its way to growth, so the only way that Spain can regain any type of competitiveness in Europe and the world is to go through an internal devaluation, which is basically undergoing a severe wage deflation. Again, inflation in Spain is certainly not a concern for the foreseeable future. Today it is Greece. As Portugal goes to the polls in June and political problems arise in Spain and Italy, the costs of a Greek DEBT RECONSTRUCTING are only the beginning of the economic problems weighing on the mandarins in Brussels.

Tomorrow morning the Bank of Canada will announce its interest decision at 8 a.m. CST. Consensus is for no change as the strong Canadian dollar is expected to keep the BOC on hold. Today, the Canadian GDP was released and the data reflected greater strength than anticipated but it did little to lift the LOONIE as continued low interest rates are expected to keep the Canadian soft on the currency crosses. All in all, I still believe that the LOONIE is the most fundamentally sound of all the major currencies but with interest rates being the flavor of the month, other higher yielding currencies have been more in favor.

Also, the selloff in commodities has led to profit taking in long-held Canadian dollar positions. Also, the Russians announced that they were lifting some of the previous restrictions on grain exports so the wheat market is down in tonight’s trading activity. Will Russian exports be enough the hold down rising prices from increased global demand? This will bear watching to see if the Russian news is merely the cause of a short-term correction.